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The Ethanol Problem

April 22, 2011

Congress enacted a law that mandates we use 35 billion gallons of ethanol by 2022, with the ethanol mixed into our gasoline.

The law said that 20 billion gallons of this must come from cellulosic materials, leaving 15 billion to come from corn.

In 2007, when the Energy Independence and Security Act (EISA) was passed, only about 7.5 billion gallons of ethanol were produced in the U.S.

Now we see the unintended consequences of EISA.

First, cellulosic ethanol is still experimental. It’s costly and requires billions of dollars of additional government funding – money we don’t have – to try to make cellulosic ethanol viable. Already the landscape is littered with failed cellulosic ventures, including that of the venture capitalist Vinod Khosla who touted cellulosic ethanol in Fortune magazine.

Second, by 2010, ethanol’s share of the corn crop had risen to 39.4%: Nearly 5 billion bushels of corn, out of a total crop of 12.45 billion bushels, were used to make ethanol in 2010.

Third, in 2010, ethanol only offset our use of oil by about 7%.  On average, we have been using over 8 million barrels of oil per day for gasoline, and ethanol only offsets about 0.7 million barrels per day. Huge amounts in gallons are really quite small when accounted for in barrels per day.

Fourth, the use of corn to make ethanol has driven up the price of food on American kitchen tables. The price of corn has doubled in the past year. Cereal and beef prices have risen because the price of corn has skyrocketed with so much of the corn crop being used for ethanol.

People have wondered whether the crop acreage planted in corn has also increased, which would offset the corn being used for ethanol.

Data shows that the acreage planted in corn increased only 11% from the 79.6 million acres planted in 2000, to 88.2 million acres planted in 2010. Increased plantings, therefore, have had only a small effect on reducing the impact of using corn for ethanol.  

Fifth, using corn, a food crop, to make ethanol has been seen as a threat to people worldwide. Using corn for ethanol has caused the price of basic foods to rise everywhere, and food is needed by poor people around the world. There have been food riots protesting the high price of food. Using food for fuel has been called a crime against humanity.

Finally, the U.S. administration wants to spend more money to increase the number of costly new “blender pumps”. These pumps would allow pumping various mixtures of ethanol and gasoline. They cost $120,000 each. For starters, the government wants to add 10,000 “blender pumps” across the nation at a cost of $1.2 billion – again money we don’t have.

A bad law, foisted on us by lobbyists, should be repealed.

EISA has a minimal effect on our use of oil, is causing food prices to rise in America and around the world, and is costing billions of dollars we don’t have.

Farmers need to be protected from a sudden repeal of the law, so it would make sense to see ethanol requirements remain frozen at today’s level for three years before the law is repealed in its entirety.

America was once called the bread basket of the world. With population growing around the world, our farmers could once again feed the world by exporting corn, wheat and soybeans grown here.

Rather than wasting government money on subsidies, food exports can provide income to farmers while improving our balance of payments.


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4 Comments leave one →
  1. April 22, 2011 12:00 pm

    I am more pessimistic about ethanol from corn. The ethanol has about 2/3 the energy content of gasoline on a volume basis. So the 12 billion gallons we will produce this year is really equal to 8 billion gallons of gasoline. To produce the corn you have to till the field, plant the corn, harvest the corn, transport the corn to a processing plant. This all uses valuable diesel fuel. In Georgia we a tranporting by rail corn 700 miles from Indiana and Illinois to a bankrupt ethanol manufactoring plant in Camilla, Georgia. Processing corn into ethanol takes a lot of energy, not necessarily petroleum. Corn takes nutrients from the soil and requires a lot of fertlizer. The energy balance of ethanol from corn was reported by Prof. David Pimentel to be 1.29 Btu is required to generate 1 Btu of ethanol from corn. As a conclusion, the savings in petroleum by substituting ethanol from corn will be small and possibly zero.

    The ethanol mandate by Congress in 2007 needs to be rescinded immediatley.

    James H. Rust

    • April 22, 2011 2:42 pm

      Everything you say about ethanol add to the resaons for rescinding the ethanol mandate.
      My only thought is that many farmers bought into the program and may have purchased equipment etc. They deserve a short period to adjust to the eleimination of the program.
      It’s a bad law. Bad for Americans.

  2. April 22, 2011 2:09 pm

    Actually the RFS mandate in EISA 2007 has run amok and in another year will implode. Renewable fuel as defined in the act is E85. The act was a corporate welfare act for E85 production, distribution and sales of flex-fuel vehicles. E10 is not renewable fuel, it is nowhere mentioned in the act, it is gasoline laced with ethanol. By next year all of the gasoline in the U.S. will be E10 with some serious economic and public safety issues, and then there will be nowhere to put the ethanol production that is mandated after that. Even if congress threw billions of dollars at blender pumps, E15 will make no difference. There are three lawsuits against the EPA that may doom the bifurcated waiver, which is not mandatory. Gasoline producers do not have to make E15 and service stations do not have to sell E15. Without liability indemnity, why would they? There are no cars that have E15 warranties so why would anyone want to put a fuel in their car that will reduce their mileage further and void their warranty?

    • April 22, 2011 2:46 pm

      Thank you for your comment.
      The EPA has been attempting to foster E85. The best way to stop the EPA in this instance is to rescind the ethanol mandate.

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